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Hurricane Postpones IRS’s Offshore Voluntary Disclosure Deadline

As
Hurricane Irene was about to make landfall in North Carolina on
August 26 and head up the East Coast, the IRS announced it had postponed the
deadline for its 2011 Offshore Voluntary Disclosure Initiative
(OVDI). The new due date for requests is September 9, 2011.
Before the extension, taxpayers had been required to complete
all requirements for the program, or make a good-faith effort to
comply and request a 90-day extension, by August 31.

According to the IRS announcement, taxpayers who have not yet
submitted requests and documents under the program must by
September 9 submit identifying information to the IRS’ Criminal
Investigation office and send a request for a 90-day extension
for submitting a complete voluntary disclosure information
package to the IRS’ Austin campus.

The IRS announced the
2011 OVDI in February. The program is designed to bring money
held in foreign accounts back into the U.S. tax system and to
help taxpayers with income from offshore accounts to comply with
federal tax law. Under the program, taxpayers that disclose
previously undisclosed foreign accounts and comply with the
terms of the program can avoid otherwise applicable civil
penalties and criminal prosecution.

The announcement does
not address the August 31 due date for information filings that
are not directly within the 2011 OVDI program, but are permitted
to be filed under the OVDI’s FAQs No. 17 and No. 18. These FAQs
provide that U.S. persons who reported all their taxable income
but only recently learned of their filing failures with respect
to Form TD F 90-22.1, Report of Foreign Bank and Financial
Accounts (FBAR), or other U.S. foreign information returns
(e.g., Forms 5471, Information Return of U.S. Persons with
Respect to Certain Foreign Corporations, and 3520, Annual Return
to Report Transactions with Foreign Trusts and Receipt of
Certain Foreign Gifts) can obtain penalty relief by filing these
delinquent returns under the parameters of the FAQs, but outside
the OVDI.

The winners of The Tax Adviser’s 2016 Best Article Award are Edward Schnee, CPA, Ph.D., and W. Eugene Seago, J.D., Ph.D., for their article, “Taxation of Worthless and Abandoned Partnership Interests.”

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